Taxes

Before determining all your new Pennsylvania tax responsibilities, you must consider both where you live and where you work.

For more detailed information on taxation, go to www.poconorecord.com, go to "Special reports" and click on "Taxing Questions."

Pennsylvania has a statewide sales tax of six percent, though many food and clothing purchases are exempt from taxation. It can get a bit tricky, however, since some food items are tax-free in a grocery store, yet are taxable if bought from a convenience store.

Pennsylvania has a $1-per-pack tax on cigarettes and a gas tax of 26.6 cents per gallon.

Pennsylvania has a "flat" income tax of 3.07 percent on personal earnings. It's called a flat tax because, unlike most other states, Pennsylvania taxes the same percentage of income for all residents. There are no brackets obligating those who earn more per year to pay a higher percentage of income tax than those who earn less - the rate is 3.07 percent for everyone.

Pennsylvania also doesn't allow any income tax deductions. You can't reduce your taxable income by deducting what you spent on child care or paying the mortgage, like you might on a federal or many other state income tax returns.

Pennsylvania allows local municipalities and school districts to collect and split a 1 percent earned income tax, in addition to the state income tax.

East Stroudsburg, Stroudsburg, Pocono Mountain and Pleasant Valley school districts - and the municipalities within their borders - jointly assess the 1 percent earned income tax and split the proceeds. You owe the 1 percent earned income tax unless you fall into a special category of exempt commuters.

If you happen to live in Stroud Township, your local earned income tax bill is 1.25 percent, with the additional quarter-of-one-percent going to a township fund for open space preservation.

In some cases. Most residents who commute to work in New York State or Delaware and pay income taxes there, are exempt from paying state and local income taxes in Pennsylvania. Those are the only two border states that don't have reciprocal tax-sharing agreements with Pennsylvania. So local commuters employed in those states are allowed to deduct income taxes paid there from income tax owed in Pennsylvania.

But it doesn't necessarily mean you will owe nothing in Pennsylvania state and local income tax. Since New York, for instance, taxes a lower percentage of earnings for those who have less income, a low-income New York worker may actually have less tax taken out there than would otherwise be owed in Pennsylvania. If so, Pennsylvania requires you to pay them the difference between what was paid in New York and what would be owed in the Keystone State.

Those commuters also owe state and local income tax on income not taxable in New York or Delaware but taxable in Pennsylvania. For instance, salary or wages diverted into a retirement plan in New York is tax-deferred there but is still taxable in Pennsylvania. So those residents are required to pay Pennsylvania state and local income tax on that portion of their earnings.

Yet another category of commuters is exempt from paying the local earned income tax - those who live here but work in the city of Philadelphia. State law enables you to deduct the 3.91 percent city wage tax there from the local earned income tax you would otherwise owe here. Sorry, but you Philadelphia workers are still obligated to pay the full Pennsylvania income tax.

Income tax responsibilities are a bit less complicated for most other commuters. If you commute to work in a state that does have a reciprocal tax-sharing agreement with Pennsylvania - New Jersey, for instance - then arrangements are made by New Jersey tax officials to collect the state income tax from your employer, through payroll deduction, and send it to Pennsylvania revenue officials.

That courtesy doesn't extend to the local 1 percent tax. If you commute outside the county, then it is your legal responsibility to pay the local earned income tax through whatever private or public tax collector handles it in your community. Many call the local earned income tax "the Berkheimer tax", after the private agency that collects it in many Monroe County communities. But different locales hire different collectors.

Keep in mind that even if you commute to The Big Apple or another location where you don't owe the 1 percent local earned income tax, you're still required to fill out the local EIT paperwork annually.

This annual local tax is applied to most county workers at the municipality in which the person works, with the local rate varying from $10 to $52 per year. The tax is typically deducted from one paycheck per year.

In most cases, a worker employed in two municipalities that assess the emergency services tax - someone holding multiple jobs in dual locations - isn't required to pay more than $52 per year. First priority is given to the political subdivision where the person is principally employed.

The vast majority of tax proceeds go to the municipality where you work, with the local school district getting $5 of the total. Municipalities must use the EMS tax either to reduce property taxes or to fund law enforcement, fire protection, ambulance or other emergency service.

In 2005, at least five Monroe County municipalities had an EMS tax: Stroudsburg's rate was $40, Paradise Township imposed a $30 tax, and East Stroudsburg, Mount Pocono and Delaware Water Gap set it at the maximum $52. Some municipalities exempt part-time workers whose annual earnings are less than a specified amount.

To find the current rates, check with your local employer or the municipal government in the community in which you work. Anyone who is asked to make more than $52 in annual payments of this tax should contact Berkheimer Tax Administrator - the tax collection agency used by most local municipalities - or the Pennsylvania Revenue Department for help in straightening it out.

If you're a homeowner or own other property in Monroe County, you must pay school district, county and municipal property taxes based on the assigned value - or assessment - of the property. Some localities also have a property tax to support the local library.

The county has an assessment office whose job is to evaluate the size and condition of the property, and of amenities of structures to arrive at common comparative values. It is those values that are the basis for property taxes.

Monroe County last completed a comprehensive inspection and evaluation of all county properties in 1988 to arrive at common comparison values. All new structures built since then, or more recent improvements of older properties, are given assessments based on the 1988 values, in an effort to have a uniform comparison.

Once the property is valued, Monroe applies its pre-established ratio of 25 percent of value to set the final assessment. A home valued at $100,000, for instance, is assessed at $25,000. And that $25,000 is the basis for assessing property taxes - the millage.

If a school district's tax rate is 95 mills, then that $100,000 home, assessed at $25,000, will produce a school tax bill of $95 per $1,000 of assessment, or $2,375 total.

School and municipal tax bills go out to property owners at different times of the year.

Property owners may challenge an assessment they believe is unfairly high compared to other properties, by appealing to a three-member county assessment board by Sept. 1 of each year. It is suggested that owners first examine their property record filings at the county assessor's office in Stroudsburg, and check the values assigned to each amenity and the sizes involved. It may turn out that you have a deck, garage or other structure that isn't included in the assessment, and your challenge is likely to bring a county inspection that could result in you actually paying more in taxes.

Remember, the assessment is the property value that serves as the basis for taxation - but it isn't in itself a tax. A high tax bill may be the result of an excessively high assessment, or it may merely mean the county, municipal and/or school tax rates (the millage, which can't be appealed) are producing the high bills.